List of Banking Terms for IBPS Clerk And RBI Exams SBI PO IBPS Po

List of Banking Terms for IBPS Clerk And RBI Exams SBI PO IBPS Po

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List of Banking Terms for IBPS Clerk And RBI Exams SBI PO IBPS Po

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  •  Ex-dividend (XD): A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment (usually two days before the record date). For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is usually indicated in newspapers with an (x) next to the stock’s or unit trust’s name.
  •  Equity Call Warrants: Warrants issued by a company which give the holder the right to acquire new shares in that company at a specified price and for a specified period of time.
  •  Equity: Ownership of the company in the form of shares of common stock.
  •  Earnings Yield: The ratio of earnings to price (E/P). The reciprocal is price earnings ratio (P/E).
  •  Earnings per Share (EPS): The amount of annual earnings available to common stockholders as stated on a per share basis.
  •  Earnings: The total profits of a company after taxation and interest.
  •  Duration: A measure of bond price volatility, it captures both price and reinvestment risks to indicate how a bond will react to different interest rate environments.
  •  Diversification: The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.
  •  Discount Bond: A bond selling below par, as interest in-lieu to the bondholders.
  •  Derivative Instrument: Financial instrument whose value depends on the value of another asset.
  •  Derivative Call (Put) Warrants: Warrants issued by a third party which grant the holder the right to buy (sell) the shares of a listed company at a specified price.
  •  Default Risk: The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner.
  •  Custody of Securities: Registration of securities in the name of the person to whom a bank is accountable, or in the name of the bank’s nominee; plus deposition of securities in a designated account with the bank’s bankers or with any other institution providing custodial services.
  •  Current Yield: A return measure that indicates the amount of current income a bond provides relative to its market price. It is shown as: Coupon Rate divided by Price multiplied by 100%.
  •  Currency Board: A monetary system in which the monetary base is fully backed by foreign reserves. Any changes in the size of the monetary base has to be fully matched by corresponding changes in the foreign reserves.
  •  Credit Rating: An assessment of the likelihood of an individual or business being able to meet its financial obligations. Credit ratings are provided by credit agencies or rating agencies to verify the financial strength of the issuer for investors.
  •  Covered Warrants: Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.
  •  Coupon Rate: The annual rate of interest on the bond’s face value that a bond’s issuer promises to pay the bondholder. It is the bond’s interest payment per dollar of par value.
  •  Coupon Frequency: The number of coupon payments per year.
  •  Coupon: The feature on a bond that defines the amount of annual interest income.
  •  Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par value.
  •  Yield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investor’s capital gain or loss on the security are taken into account.
  •  Yield (Internal rate of Return): The compound annual rate of return earned by an investment
  •  Window Dressing: Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.
  •  Warrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.
  •  Valuation: Process by which an investor determines the worth of a security using risk and return concept.
  •  Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.
  •  Trust Deed: A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.
  •  Trading Rules: Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.
  •  Time Horizon: The duration of time an investment is intended for.
  •  Technical Analysis: A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)
  •  Support Level: A price at which buyers consistently outnumber sellers, preventing further price falls.
  •  Substantial Shareholder: A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.
  •  Subordinated Bond: An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.
  •  Stock Splits: Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.
  •  Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.
  •  Short Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.
  •  Short Position: Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.
  •  Settlement: Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receives from the broker the proceeds of a sale.
  •  Short Hedge: A transaction that protects the value of an asset held by taking a short position in a futures contract.
  •  Senior Bond: A bond that has priority over other bonds in claiming assets and dividends.
  •  Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
  •  Return: Amount of investment gain or loss.
  •  Resistance Level: A price at which sellers consistently outnumber buyers, preventing further price rises.
  •  Repurchase Agreement: An arrangement in which a security is sold and later bought back at an agreed price and time.
  •  Relative Strength Index (RSI): A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.
  •  Reinvestment Value: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.
  •  Redemption Value: The value of a bond when redeemed.
  •  Face Value/ Nominal Value: The value of a financial instrument as stated on the instrument. Interest is calculated on face/nominal value.
  •  Fixed-income Securities: Investment vehicles that offer a fixed periodic return.
  •  Fixed Rate Bonds: Bonds bearing fixed interest payments until maturity date.
  •  Floating Rate Bonds: Bonds bearing interest payments that are tied to current interest rates.
  •  Fundamental Analysis: Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates and risk evaluation of the firm.
  •  Future Value: The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest.
  •  Future Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will grow over a period of time when it is placed in an account paying compound interest.
  •  Futures Contract: A commitment to deliver a certain amount of some specified item at some specified date in the future.
  •  Hedge: A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.
  •  Income: The amount of money an individual receives in a particular time period.
  •  Index Fund: A mutual fund that holds shares in proportion to their representation in a market index, such as the S&P 500.
  •  Initial Public Offering (IPO): An event where a company sells its shares to the public for the first time. The company can be referred to as an IPO for a period of time after the event.
  •  Inside Information: Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information.
  •  Insider Trading: The illegal use of non-public information about a company to make profitable securities transactions
  •  Intrinsic Value: The difference of the exercise price over the market price of the underlying asset.
  •  Investment: A vehicle for funds expected to increase its value and/or generate positive returns.
  •  Investment Adviser: A person who carries on a business which provides investment advice with respect to securities and is registered with the relevant regulator as an investment adviser.
  •  IPO price: The price of share set before being traded on the stock exchange. Once the company has gone Initial Public Offering, the stock price is determined by supply and demand.
  •  Junk Bond: High-risk securities that have received low ratings (i.e. Standard & Poor’s BBB rating or below; or Moody’s BBB rating or below) and as such, produce high yields, so long as they do not go into default.
  •  Leverage Ratio: Financial ratios that measure the amount of debt being used to support operations and the ability of the firm to service its debt.
  •  Libor: The London Interbank Offered Rate (or LIBOR) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). The LIBOR rate is published daily by the British Banker’s Association and will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.
  •  Limit Order: An order to buy (sell) securities which specifies the highest (lowest) price at which the order is to be transacted.
  •  Limited Company: The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions.
  •  Liquidity: The ability to convert an investment into cash quickly and with little or no loss in value.
  •  Listing: Quotation of the Initial Public Offering company’s shares on the stock exchange for public trading.
  •  Listing Date: The date on which Initial Public Offering stocks are first traded on the stock exchange by the public
  •  Margin Call: A notice to a client that it must provide money to satisfy a minimum margin requirement set by an Exchange or by a bank / broking firm.
  •  Market Capitalization: The product of the number of the company’s outstanding ordinary shares and the market price of each share.
  •  Market Maker: A dealer who maintains an inventory in one or more stocks and undertakes to make continuous two-sided quotes.
  •  Market Order: An order to buy or an order to sell securities which is to be executed at the prevailing market price.